Obstacles to "Sub-2" foreclosure rescues in NC
Greetings from Asheville.
I've just run into what I think is a major snag into doing foreclosure rescues using "Subject to" financing in North Carolina due to NC General Statute § 75-121. Here's what it says in a nutshell:
Foreclosure rescue transactions prohibited; exceptions; violation.
(a) It is unlawful for a person or entity other than the transferor to engage in, promise to engage in, arrange, offer, promote, solicit, assist with, or carry out a foreclosure rescue transaction for financial gain or with the expectation of financial gain, unless prior to or at the time of transfer, the transferee pays the transferor at least fifty percent (50%) of the fair market value of the property as determined by a licensed appraiser. An appraisal to determine the fair market value of the property must be performed no more than 90 days prior to the transfer.
I'm meeting with an attorney in Asheville next week who specializes in foreclosures. At our local REIA meeting he publicly stated that § 75-121 makes it impossible to do a "Sub-2" in North Carolina if the loan is in default (a loan is technically in default if the homeowner is late on a single payment). Please note that the statute makes no reference to equity positions, Just FMV. In other words, it appears that even if a property were underwater, you'd still have to pay them 50% of the FMV.
Have any of you completed a Sub-2 foreclosure in NC or know someone who has? I'd love to talk to you.
Thanks for reading this.
Gary
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